Home Depot Says Slashing Tax Deductions Won't Hurt Housing BoomBy
Home Depot Inc. isn’t buying the real estate industry’s claims that a provision in the House Republicans’ tax plan to reduce the mortgage-interest deduction would cause U.S. home prices to plummet.
“We don’t see much of an impact,” Home Depot Chief Financial Officer Carol Tome said in an interview Tuesday after the retailer reported third-quarter results. “There is no real empirical evidence that suggests mortgage-interest deductibility is at all correlated to home ownership.”
The world’s largest home-improvement chain scours economic and housing data to come up with its forecasts. Home prices are especially a focus, because when they increase people spend more on their properties. And the retailer sees no signs that price increases will slow down for the next three years -- even with a cut to mortgage-interest deductions. This is due to millennials buying more homes, a growing economy and a housing shortage in many regions, Tome said.
Home Depot’s outlook contrasts with that of the National Association of Realtors, which has said the House tax bill would cause prices to fall more than 10 percent. In a letter to members of Congress on Friday, the group said the plan -- which would lower the tax-exempt cap on mortgage interest to $500,000 from $1 million -- would reverse more than a century of pro-home-ownership tax policy.
Tome said just 22 percent of U.S. tax filers claim the deduction and only about 5 percent of mortgages are above $500,000.
“It’s a small percentage of the population that would be impacted,” Tome said.